You cannot say they have failed, because they haven't yet closed the doors. But I don't see how they are "clearly not a failure" if you include "profitable business" in their list of goals.
,,Tesla’s losses are piling up despite record unit sales''
Tesla has losses _because of_ record unit sales.
Increasing manufacturing capacity is capital intensive. It would be much easier for Tesla to stop expanding and just sell luxury vehicles, but that's not the goal of Tesla (and it would be a bad long term financial decision).
A $40k Tesla is on equal footing with a $25k ICE car in terms of TCO so I’m not sure why you think they are still expensive. They have come down a lot.
And many people who walk onto a car sales lot with $25k in mind end up getting talked into a $35k car, so with all the savings Tesla really can be the cheaper option.
With Tesla if you get talked into the $50k+ stealth performance you’re still on equal footing with the $35k car until you add future self driving.
AFAIK, Tesla's "savings" number is not meant to be TCO, just an adjustment for the price of gas vs. electricity. It doesn't factor in the lower amount of maintenance needed on an EV (maybe because they still want to sell service plans).
What chc said. But yes I agree I don’t like the way they display the price after savings first. I guess they are fighting the issue that most people don’t have this savings top of mind. It’s their call to make. I’m sure it rubs some people the wrong way enough to scare them off. I wonder if they have done A/B testing with it.
> A $40k Tesla is on equal footing with a $25k ICE car in terms of TCO so I’m not sure why you think they are still expensive. They have come down a lot.
In the American market. In Canada, a Model 3 now costs the same as a Model S did at launch. Other manufacturers have worked out ways to soften the price increase due to currency fluctuations.
Every so often I run numbers on electric cars for my use, but I'm never able to get a break-even point that isn't measured in decades.
I'd absolutely support a carbon tax to capture such externalities (which would increase the purchase and fuel costs for all cars, but proportionally less so for electrics), but I don't have the personal luxury of spending the additional money for electric car - I'd just drive my ICE car less.
If enough people think like you the carbon tax is going to be an everything tax (sea walls, relocations of populations, etc.) which is going to cost a lot more than a Tesla price differential.
Well... no, a carbon tax can/should be sufficiently high to cover those externalities. I'd support that. I'd probably wouldn't be able to afford a car at all anymore, which would be much more environmentally friendly than an electric car.
>I'd probably wouldn't be able to afford a car at all anymore
If you have purchased a Tesla before that point, others will be paying you for rides in your self-driving car as part of a ride-hailing fleet. Just a thought, might not pan out, as with any investment.
It's not so much about what you support... the tax will come down from above with or without your support. It's more about what investments are you willing to make personally, because that part is really up to you. There are risks, to be sure, but in the meantime it's a fun, safe car that doesn't cost as much as people think.
I'm willing (and have already) stopped eating meat, among other things. I can't afford an electric car. I'd be more willing and able to invest in a lifestyle that doesn't involve owning a car.
I couldn't find a total cost of ownership on the Tesla Model 3, but the car I drive has a 5-year TCO of about $32k for all insurance, gas, etc. (Assuming bought new - I got it for under $20k with 8,000 miles on it.)
So I'm allowed to think the Model 3 is expensive. Of course, I'm just me, I'm not "mainstream." I think it's too expensive for mainstream because the only person I know that bought one is accustomed to driving high-end German cars, and she paid $60k for her Model 3. I get the feeling the mainstream doesn't believe a Tesla is affordable. Maybe they are wrong, in that if they have a garage for charging, they'd save enough in gas and maintenance to make up the difference, but most people don't buy cars based on TCO (well, I don't know that for sure, but I have a feeling that's true.)
Where can I find a breakdown of the TCO like this? Is there any source?
I would think that Tesla TCO would be through the roof once the cars start aging.
It's one thing to have the dealership fix every little thing under warranty - quite another to pay $5,000 to have your sunroof fixed because it requires a special encryption chip.
1) Is a false dichotomy. First of all, you're presuming that Tesla repairs will take 3-6 months. Secondly, you're presuming that non-Tesla repairs will take 0 minutes.
I don't doubt that Tesla has more issues with parts availability than other manufacturers, but if you need a car every day, you should have a backup plan -- eg, rental car add-on to your insurance policy so you have something to drive while your primary vehicle is being repaired. I've had gas-powered cars that were in the body shop for a month or more.
Most rental car insurance is for 1 month, which is enough to repair most cars. I am ok with losing my car for 1 month to repair. The problem with Tesla is that people get stuck with body repair queues that are ~6 months [0]
I guess you haven’t been keeping up or reading the replies to your own comments. Tesla has in house body work now to address this kind of thing. They are fixing the problems you have heard about.
We have one and live in an apartment. I charge at work (free) usually and other times at a supercharger. Using a supercharger all the time slightly shortens battery life in theory especially if you do it wrong, but we do it less wrong. And Model S owners who have been exclusively supercharging have been reporting that their battery degradation is not bad at all.
The body work issues you mention are mostly in the past. And you wouldn’t be without a car.
I'm not sure that is a goal though. Plenty of businesses are run at a loss intentionally nowadays for tax reasons. And unlike a lot of its software competitors, Tesla is in a capital-intensive business where investing in increased manufacturing capacity puts a nonspeculative asset on its books.
obviously it's a loss on paper. When R&D investment counts against income for tax purposes; where T is the tax rate, R is the expected return made on R&D and I is interest paid on money to fund R&D, it makes sense to borrow enough money to offset all revenue while
I-R<T
and a lot of tech companies go nuts as a result with ridiculous acquisitions. In that sense, Tesla has a relative advantage because a factory's value is unlikely to go to zero.
This comment was provocative by associating the Tesla-nay-sayers to anti-vaxxers and flat-earthers, but I think it's worth discussing, and so I vouched for it.
The author sixQuarks adds two points about difficulty in the automotive market that are level-headed and substantive. I had the same thoughts about Rivian, but if the Amazon truck deal becomes real and they can grow into the shell of another defunct car manufacturing plant, maybe they have a chance. Other replies add support about what Tesla has achieved ("make electric cars cool").
Tesla and Musk are polarizing for sure, fans and shorts abound here on HN. But I think this comment is right to highlight the irrational arguments around them, not to mention the outright hate.
Honestly, players like Rivian and NIO shouldn't try to manufacture their own cars - they should contract that out to someone who knows what they're doing and already has the capital invested in production tooling (ex. Magna). Rivian/NIO & co. are best suited to design and engineering until they reach a market threshold where it actually makes sense to spin up a dedicated factory.
>but even if they fail long-term, they're a success in my book.
>People that think Tesla is a failure at this point are classified in the same category as anti-vaxxers and flat-earthers in my opinion.
Some people don't have the same definitions for words as you do, so you can't put them in the same category as flat-earthers.
I'm not so sure this latest battery innovation hasn't guaranteed their success. As I'd happily pay their premium for an ultra safe car and my only real concern, battery life, completely alleviated. A battery that outlives the frame will market itself. The safety, cheap operation, and less stressful augmented driving are just frosting at that point.
Let's wait a couple more quarters before being able to say it is clearly not a failure.
The only reason they are still alive is the hype around Elon Musk.
I mean don’t they still make a loss on every car. They have been alive for the duration of the stock market bull run. being sceptical of their chances in a recession is normal.
The cars are not produced at a loss. Each car is profit. The negative cash flow is created by investing heavily in factory expansion like the model 3/Y production line and the record time construction of gigafactory 3.
The cars are not produced at a loss. Each car is profit.
Only under magical unicorn fantasy accounting. Under the same accounting standards every other car maker uses (GAAP), Tesla still loses money on each car.
From Tesla's own financial report:
"excluding regulatory credit revenue, automotive gross margin improved by ~200bp (compared to a decrease of 125bp on a GAAP basis). [emphasis added]
2) Breaking out GAAP and non-GAAP figures is totally standard and commonplace among publicly traded companies. Take a look at Ford's Q2 letter, for example, which has a whole page describing why they use Non-GAAP financial measures to supplement GAAP figures [https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...]
As of August 2018 that appears to not be the case:
Tesla says that the Model 3’s gross margin “should grow significantly” to approximately 15 percent in the third quarter and 20 percent in fourth quarter, thanks to “continued reduction in manufacturing costs and to some extent an improving mix.” From here on out, CEO Elon said during a call with analysts Wednesday evening, “the goal is to be profitable and cash flow positive every quarter going forward.”
>Tesla says that the Model 3’s gross margin “should grow significantly” to approximately 15 percent in the third quarter and 20 percent in fourth quarter, thanks to “continued reduction in manufacturing costs and to some extent an improving mix.” From here on out, CEO Elon said during a call with analysts Wednesday evening, “the goal is to be profitable and cash flow positive every quarter going forward.”
Please do not quote by using a code box. Use italics (put an asterisk on either end) or a carrot > to indicate a quote, rather than creating a endlessly long sideways scroller.
Last quarter's gross margin was 15%. Given that the small number of Model S and X's probably have much better margins, the Model 3 margin is below 15%, but probably not much below.
Important caveat: this is under Tesla's made-up accounting rubric. Under GAAP accounting (i.e., the standardized accounting methods everyone else uses) they lose money on each car, i.e., they have a negative gross margin.
2) Breaking out GAAP and non-GAAP figures is totally standard and commonplace among publicly traded companies. Take a look at Ford's Q2 letter, for example, which includes a whole page describing how and why they use Non-GAAP financial measures to supplement GAAP figures [https://s22.q4cdn.com/857684434/files/doc_financials/2019/q2...]
I'm not rooting against or for Tesla, but they are extra shady regarding accounting. They are losing money on each car. There is so much misinformation around this pushed by Tesla fans and the company itself though that you might easily believe they are profitable, but they are not!
Yeah, that keeps getting repeated by the anti-Tesla crowd. But they make a great profit on every car, and have consistently keep growing in sales.
Right now they just can't manufacture the cars fast enough for the demand. They'll have to keep building factories which takes a big chunk from their cash.
The person was makeing a factually false statment. I corrected it.
What your opinion about the future of the company is doesn't matter about what current situation is.
People have been saying Tesla will fail 'soon' for a long time. Once they actually do fail, then we can say they have failed. Before then its just personal opinions.
I don't know why you're down-voted. Tesla's brand is super valuable; their electric car tech (particularly their efficiency and energy density and charging technology--not just raw rate, but the form factor of their charging tech) is heads above their competitors. If they ran into serious trouble, someone would buy them up so hard.
Electric cars (heck, automotive manufacturing in general) are a tough business. Tesla is now competing at a (soon) $7500 disadvantage in the US compared to most of their competitors due to the phase out of the EV credit. Gas prices are incredibly, ridiculously low. And yet they're still in very high demand, outselling everyone else in the US in raw unit sales and globally in revenue.
That's no guarantee that things couldn't get worse, but Tesla has outlived many of its detractors before, and it's not just because of Elon Musk.
The 7500$ is a huge advantage for Tesla today that was pushed through a lot of lobbying. It literally means that everyone's tax money is subsidizing luxury cars for the rich.
Once this gets phased out, they will have to compete with regular prices against normal car and their high price point will make it way less attractive.
It is true that soon competitors will still get the 7500$ tax cut while Tesla exhausted theirs. That's simply because they use all their credits and now need to come to a price point that makes sense without subsidies.
The $7500 credit is all but completely phased out already for Tesla (it's only $1,875 right now). And yet they're STILL outcompeting the other Plug-in electric cars in the US by a large margin (13,150 Model 3s in August versus 2500 Prius Prime, the next most-sold plug-in vehicle). That is my point.
It's an advantage to conventional carmakers who wait to the last minute to invest in electrification, after someone else has done all the hard work, and just integrate some off the shelf electric drivetrain. It puts those who actually invest in a full, cleansheet efficient electric drivetrain domestically in the US (like Tesla and GM) at a big disadvantage versus foreign firms or for multinational corporations like the Volkswagen group who have multiple subsidiaries like Audi, VW, Porsche who each get their own group of credits (even though the Volkswagen Group's MEB platform will be available to all their subsidiaries).
It makes no sense and incentivizes the wrong behavior: advantages foreign firms above domestic. Advantages latecomers over those with the foresight to invest early (Tesla and GM, for example). There either should be one big pot of credits, or the credits should be sunsetted on a global timeline (instead of by number).
And until conventional cars are paying for their full externalities from carbon emissions (and others), they are being implicitly subsidized and an EV credit of some sort (although imperfect) will be needed to level the playing field.
